Mutual funds bought IT stocks, sold financials in September ahead of earnings season

As the results season came knocking on the door, leading mutual fund houses in India were seen piling up shares of information technology (IT) firms in the month of September. Almost all fund houses bought at least one of the leading IT sectors players in the previous month, data sourced by Edelweiss Research showed. Among the top ten most bought stocks in the month, four were from the IT sector. IT shares are the hot favourite on Dalal Street as investors look to bank on the expected surge in adoption of digital trends across the globe.

Aditya Birla Sun Life Mutual Fund’s top addition during the previous month was Mindtree, followed by Dr. Reddy’s Labs, Tech Mahindra, TCS, and Essel Propack. The fund house bought shares of Mindtree worth Rs 245 crore. Tech Mahindra and TCS shares were bought by the mutual fund major worth Rs 175 crore and Rs 149 crore, respectively. On the other hand, leading banks such as ICICI Bank, Axis Bank, Kotak Bank, and HDFC Bank were the most sold stocks by Aditya Birla Sun Life MF.

HDFC Mutual Fund’s top additions were Bharti Airtel, HCL Technologies, TCS, HDFC Bank, and Bosch. The value of HCL Technologies shares bought by the fund house was Rs 243 crore, followed by Rs 126 crore stocks of TCS. Although shares of HDFC Bank were bought in September by the fund house, ICICI Bank and SBI Cards were some of the most sold scrips, continuing the trend of adding IT stocks and selling financials.

Another IT giant Wipro along with TCS was on the shopping list for Axis Mutual Fund. The mutual fund bought TCS stocks worth Rs 293 crore and piled on Rs 253 crore worth Wipro stocks. Dr Reddy’s Labs, Essel Propack and PI Industries were the other top add by the mutual fund. Axis Mutual Fund was seen selling telecom major Bharti Airtel which was one of the most bought shares on Dalal Street in September. Additionally, Axis MF also sold leading banking sector stocks. 

IT stocks since the beginning of October have clocked gains of over 10% each. The earnings season is expected to help them gain further as revenue growth is expected to inch closer to pre-coronavirus levels. Analysts believe that IT stocks are entering a longer bull phase which will be helped by healthy deal wins and strong demand.

ICICI Prudential Mutual Fund was also seen piling up shares of TCS in the previous month, the only IT firm in its five top additions. The fund house bought TCS shares worth Rs 298 crore. Along with it, Bharti Airtel, HDFC, ITC, and Zydus Wellness were the other top additions. 

Hindustan Unilever (HUL) shares were the most sold by mutual fund houses in the month of September. A total of 7.1 million shares of HUL were sold between August and September, worth Rs 1,474 crore. Other stocks that were heavily sold included State Bank of India, ICICI Bank, and HDFC Bank. The only IT company to feature among the most sold stocks was Infosys.